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We are living in an age of innovation and startups, where each day innumerable start ups are sprouting up and being nurtured across the world, with each one of them hoping to go on to become the next unicorn. Be it bright students with dreams of making it big in their eyes or be it middle aged working professionals hoping to finally make a name for themselves, people from every segment of society are making an endeavor towards starting on their own. In fact it won’t be an exaggeration to state that starting up on your own is the preferred career choice for people now a days.

The cost of setting up and managing your own startup can be daunting to say the least. Many a times the primary reason for a startup to be unsuccessful is failing to control it’s overall expenses. While the fact that a majority of startup founders underestimate the costs of running a startup is true, another fact that has to be accepted is that founders should be prepared for any eventualities. So what can founders do, how can they minimize their overall costs. We give a step by step guide for startups to cut their costs and thus make their chances of lasting success more probable.

Hire more freelance employees

The costs incurred by any startup on full time employees is a major part of it’s overall expenses. Apart from the salary paid, firms also have to provide paid leaves, employee benefits and take care of other employee issues that require capital. As compared to this, the expenses incurred if a startup hires freelance workers is much much less. To be more precise, a start up can save around 20 to 30 percent of it’s overall costs if it hires part time freelance workers instead of full time employees.

Minutely plan all expenditures

The initial excitement of running a startup can sometimes result in wayward spending on the part of it’s founders. This majorly stems from the thought process of leaving no stone unturned for the success of the startup. There might be cases of overspending when just minimal spending would have sufficed. Thus it is imperative to minutely plan all expenditure so that it is beneficial for the firm. Just to give an example, there’s a trait on the part of founders to ignore assessment of spending on insurance, utilities, salaries etc. as there is a thought that these will figure themselves out. Simply put, this is taking the wrong approach, instead, these aspects should also be minutely analyzed.

Save expenses on office space

The costs incurred on leasing a working space is considerable and a big part of a startup’s overall spending. Many startups are still of the view that the expenses incurred in leasing an office space are necessary. The alternative way is to think of ideas like sharing office space with other startups. Another view that many startup entrepreneurs are acting on these days is that office space is irrelevant if clients do not regularly visit them. Simply put “ why pay for office space if you do not meet clients there”.

Don’t outsource advertising and public relations

Rather than paying someone else for advertising and public relations, startups can do their own public relation, to increase their brand awareness. To give an example, rather than paying someone for writing out press releases, resources such as HARO, MediaSync etc. can be used for developing and distributing press releases. Likewise on the advertising front, startups can think of out of the box advertising methods like using the online ecosystems such as social media sites, forums etc. to increase their brand’s recall value.

Review the IT infrastructure

The cost of a startup’s IT infrastructure such as licensed software, workstations etc. is a major part of it’s overall expenses. It would be fair to say that all startups struggle with the the expenses incurred on their IT infrastructure. The ideal alternative here would be at using open sourced software products instead of licensed ones. Furthermore, other options are also there, like switching to cloud computing and/or virtualization etc.

Save on travel costs

There’s a tendency at some start ups to spend lavishly on travel. Things such as hiring a cab when comfortable public transport is available, flying first class etc. do take a toll on an organization’s overall expenses. Moreover, traveling for a business meeting when video conferencing with the client would have sufficed is also a trait common in many start ups. Agreed, nothing can replace in person meetings but still such meetings need to take place if and only if they are absolutely critical. Why spend a fortune on traveling half way across the world to meet a client when just a meeting over video conferencing would be enough?

Track each and every expense

Tracking each and every expense is a simple and continuous process that is ignored by many startups. Needless to say, this is one big mistake start ups make when they fail to track everything. Just like in our personal finances, tracking helps organizations to assess their overall expenses, find verticals where the expenses can be cut without any negative impact on efficiency and also find areas where expenses need to be increased to help the organization grow further. Tracking each and every expense is a process every start up should undertake.

Think out of the box

Last but not the least, start ups should always endeavor to think of out of the box approaches for cutting down on their overall expenses. Apart from all the aforementioned strategies, regular brainstorming sessions should be held that would help decipher how the startup can continue saving more and more money, thus increasing it’s overall efficiency. Extending on this, founders should keep in mind that every business is different, so, one approach suits all won’t be possible here. Startup founders should deftly and inventively decide on undertaking strategies that would help reduce the overall expenses of the organization. Initiatives like offering incentives to employees as a way of motivating them to think of innovative ideas to save on expenses should be undertaken.